Pakistan Witnesses $700 Million Outflow from Govt Securities & Equity Market

Pakistan’s economy has witnessed a new shock as nearly $700 million depleted from the reserves on the equity of the government debts securities and equity market unleashing its severe adverse impact on the Rupee against Dollar as well. According to statistics updated by State Bank of Pakistan, an outflow of $699 million has been seen in the month of March from T-Bills, Pakistan Investment Bonds and Pakistan Stock Exchange PSX. The present situation has hurt the ailing economy and shaken the confidence of equity investors. Special Convertible Rupee Account SCRA of the central bank stated that around $624 million was withdrawn by the investors in T-Bills as they did not want to reinvest in the government papers. ALSO READ Forex Firms Warn of Dollar Shortage Unless SBP Agrees to a Condition Besides, an amount of $41 million was diverted from Pakistan Investment Bonds till March 12. In the equity market, an amount of $33.28 million was divested by foreign equity traders which heavily impacted the trading of Pakistan Stock Exchange (PSX). In the same month, these securities also received an amount of $27.9 million as hot money. The country’s foreign exchange reserves also increased by $32 million till March 6 to stand at $18.9 billion. The sudden outflows of Dollars, mainly from hot money, have impacted negatively on the strength of Rupee which fell to 159 against the greenback. Economists earlier heralded that the sudden divestment in government debts could shock the economy however the central bank has been confident in its planning. The outflows of Dollars after divestment in T-Bills and PIBs witnessed a steep slump recorded in global equity markets following a nosedive in oil prices. On the other hand, the expected policy cut in the upcoming monetary policy will also reduce the charm of the profit rate for the investors. It is likely that the central bank will remain cautious about the cut in the policy rate which will attract these investors again. According to SBP, the overall hot money investment surged to over $4.1 billion since July till March 12 till year. Investors from UK retained the highest investment of $1.45 billion in government securities followed by the USA with $736 million. Investments from UAE and Luxemburg stand at $125 million and $79 million respectively. Countries like Singapore, Mauritius, Canada, Australia, and etc. have made divestments.